Research on the Impact of Relationship Networks on Farmers’ Formal Credit Constraints: The Case of China
Based on the survey data of Lishui City, Zhejiang Province, this paper uses the Heckman two-stage model to construct a credit constraint function without selection bias, and explores the relationship between the scale and quality of the relationship network and the credit constraints of rural households. Research shows that the scale of the relationship network is affected adversely by urbanization and networking, having a weaker impact on the formal credit constraints of rural households. The quality of the relationship networks can improve farmers’ awareness of formal credit, reduce transaction exposure, regulate farmers’ behavior and act as a “guarantee”, thereby effectively alleviating farmers’ formal credit constraints. At the same time, the relationship network of farmers is gradually becoming more structured, where farmers' social interests are becoming more purposeful. Additionally, formal financial institutions have set a threshold for farmers’ credit, which requires a certain amount of securities for money.
Li B H, Dou Y D, & Yang Zet al. (2011). The impact of changes in social network on the vulnerability of rural households to poverty: an empirical study taking Changgang Village in Hubei Province as an example. Rural Economy, 3, 100-103.
Sun Y & Lin WL. (2013). The impact of social capital on farmers’ financing in the process of marketization-Evidence from CHIPS. Agricultural Technology Economy, 4, 26-34.
Lin N, Walter M, & Ensel J C. (1981). Social resources and strength of ties: Structural factors in occupational status attainment. American Sociological Review, 4, 393-405.
Zhao X Y. (2012). Summary of social capital measurement research. China's Population, Resources and Environment, 7, 127-133.
Xu X Y, Xu C, & Li C Z. (2018). The influence of relationship network on farmers' forestland inflow behavior: based on survey data in Zhejiang Province. China Rural Economy, 9, 62-78.
Wang X H & Tan KT. (2014). Research on the influence of social network on the availability of loans from formal institutions of rural households. Journal of Xiangtan University (Philosophy and Social Sciences Edition), 1, 30-34.
Jiang W. (2016). Reputation concerns of independent directors: evidence from individual director voting. The Review of Financial Studies, 3, 655-696.
Guo C Z & Chen HB. (2002). Research on the entropy coefficient evaluation method of securities investment risk. Quantitative Economics and Technical Economics, 5, 41-44.
Zhang JJ. (2008). Social capital of farmer households and its influence on their credit behavior: An empirical analysis based on the survey of 397 farmer households in Henan Province. Issues in Agricultural Economics, 9, 28-34.
Yan W & Chen X. (2014). Analysis of the influencing factors of rural households’ lending behavior from the perspective of social capital-Based on the empirical study of 1294 survey samples in Jiangxi. Jiangxi Social Sciences, 8, 210-215.
Boucher S.R, Barham B.L., & Carter M.R. (2005). The impact of ‘market-friendly’ reforms on credit and land markets in Honduras and Nicaragua. Word Development, 1, 107-128.
Yu Q S & Zhou YH. (2014). Intensity of credit constraints and peasant households' welfare loss: An empirical analysis based on cross-sectional data of China's rural financial survey. China Rural Economy, 3, 36-47.
Yang M W & Zhang LZ. (2019). Research on the impact of social capital intensity on rural household borrowing behavior-Based on 2016 CFPS data. Economic and Management Review, 5, 71-83.
Dai L, Yu L H, & Lan et al. (2020), Does farmland mortgage alleviate the formal credit constraints of large grain growers-Based on an empirical analysis of 434 large grain growers in Liaoning Province. Agricultural Technology Economy, 3, 20-31.
Chen Q. (2014), Advanced econometrics and stata application. (2nd ed.). Higher Education Press.
Copyright (c) 2021 International Journal of Engineering and Management Research
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.